Former attorney-general Robert McClelland has announced his intention to retire from Parliament at the next election.

Mr McClelland, who was dumped from Cabinet by Prime Minister Julia Gillard in March last year, says he made the decision after talking with family and friends over the Christmas break.

"After almost 17 years in Federal Parliament, my decision has not been taken lightly," he said in a statement.

"I take this opportunity to express my appreciation to the constituents of Barton.

"I owe them a deep sense of gratitude for their support over the past 17 years.

"It has been a tremendous honour and privilege to represent them in the Parliament of Australia."

Mr McClelland publicly backed Kevin Rudd in last year's leadership ballot, and was demoted by Ms Gillard the following month.

During a parliamentary debate last year on legislation aimed at cracking down on union officials who misuse members money, Mr McClelland made a thinly veiled reference to Ms Gillard's work history as a lawyer.

In a subsequent interview, he said his motivation in raising the issue was to make it easier for union members to recover misappropriated money.

His comments prompted renewed focus on Ms Gillard's involvement in helping set up the Australian Workers Union (AWU) Workplace Reform Association.

The association's funds were used by Ms Gillard's then boyfriend Bruce Wilson as a "slush fund", although he denies suggestions he financially benefitted from it.

Opposition Leader Tony Abbott says Mr McClelland will leave Parliament with the respect and best wishes of the Coalition.

"The Liberal Party looks forward to vigorously contesting Barton," he said.

There is already speculation about who will run as Labor's candidate in Mr McClelland's New South Wales seat.

Names being discussed include the state's former premier Morris Iemma, former Labor staffer Kirsten Andrews, Rockdale Mayor Shane O'Brien and Brent Thomas, who ran for the seat of Hughes in 2010.